Flatpack Furniture: IKEA’s Development in IndonesiaCountry Focus
PT Hero Supermarket TBK holds the license for IKEA’s operations in Indonesia, which has had a successful run in the country for the past four years. Ranjit Jose spoke to Patrik Lindvall, President Director, about the brand’s growth in this market.
IKEA has been operating here for a number of years. What has the experience been like?
My experience in Indonesia is short as I have been here since February. My past position with IKEA was in Hong Kong and I was closely following Indonesia. I can share, on behalf of my team, that the experience is positive. The mission and vision is to create a better everyday life for the many people. It’s an enormous base for that vision statement. What we experienced so far is acceptance and appreciation in the market, and we have seen visits growing every year since the end of 2014 when we opened. So, it’s positive and we are humble for the trust in IKEA.
We hope to grow the visits to store and website. We are privileged and honoured by the acceptance
How have the recent currency fluctuations affected IKEA?
The cost of goods we buy is our biggest cost. That’s clear. The Rupiah is up and down and has leverage on the cost factor but we can’t impact it. We focus on what we can impact. Our commitment is everyday low prices and catalogue prices fixed for a year. That’s our promise and our focus. At the same time we live by our values whereof cost consciousness is one fundamental and crucial for IKEA – only by keeping our costs low we can offer well designed, good quality, sustainable, functional and low priced home furnishing products and solutions.
Are there plans for expansion to other cities?
Our first priority and focus is to deliver our promise in existing store and website. At the same time Indonesia is an amazing opportunity and any retailer here sees enormous potential. The challenge is to decide what to prioritize and for IKEA it always starts with keeping the promise – making sure the shopping experience in IKEA Alam Sutera and IKEA website is as good as possible. In addition to that we are making IKEA more accessible through our pick up points in Sentul, Bekasi and Surabaya as well as planning for a new store in eastern Jakarta, Garden City, by end of 2020.
What are some of your challenges and what successes?
The rupiah issue, as you just mentioned, is one. Also, the licensing and regulations are a challenge, but we always work closely with the government and various ministries to stay well informed and compliant. Regardless of where we are, we always comply with the regulations. With growth comes additional staff, co-workers and we need to be effective leaders and inspire them. That keeps me up at night.
We’re big fans of IKEA’s sustainability programmes and CSR initiatives. Can you tell more about this?
It starts with sourcing and the supply chain. We have the iway—the IKEA way. We work to standards that are acceptable to us. For example, we have zero tolerance for child labour. Labour rights are important. I’m proud of representing the brand this way. At the local level, when we opened, we had the “blue bag project” where funds from selling the bags went toward installing septic tanks in Jakarta. At the moment we have the removal and recycling service in collaboration with a non-profit organisation for them to collect unused furniture from customers’ homes, refurbish and sell them. The collected fund is used to provide free education for less fortunate children.
We also have the soft toy programme where sales from our soft toys go to UNICEF programmes. This is global thanks to the partnership. In the recent tragedies in Indonesia, in Lombok and Palu, we are involved along with Hero, to raise funds and products for those areas including blankets, medicines, fresh water, doctors, etc
In conclusion, please tell us a little about your background. Have you been in retail long?
I’m a Swede. So, I was born and raised with IKEA. All Swedes have a connection to it but I didn’t think of joining it until I worked with a different company that was a competitor. Me joining IKEA was a coincident - One day I asked to visit and find out what they were doing, and I was offered a job right there!
IKEA has a clear business idea, offering good quality home furnishing products at prices so low that as many people as possible can afford them that inspired me. Also, the leadership and values, the brand represents, such as simplicity, cost consciousness and humbleness resonates well with my own belief – it was a natural fit and I joined the global franchisor of the IKEA brand in 2002. I was in executive roles working with IKEA franchises in Europe and the Middle East and eventually in the Asia Pacific.
Since joining the brand my role has changed and I moved from franchising to being Managing Director to distribution in the Asia Pacific, then more recently in HK leading the IKEA Hong Kong operations during a period of massive growth and change – among others integrating online and offline retailing. Now I’m here. I’ve been in retail since 2013 so it’s a long journey but since the world is evolving quickly and IKEA is growing my learning is never ending and most things remain to be done.